Tobacco Documents Online

t t.aR~ . MtM 6.00 • C.Y. V•t ~ Yvt IOr. • OlO.lt.l .M. C 1141111 00+• J . •04. MtaT a OJO<IO 10••7 W•.• I• alt t ttYl~.t MM a •.ON •OO/Ot t OrtO.l. •..wf. "...t• . w... t•r.0 O r.• W . 00.•..J 64M L .6.411'111 .M•tl • •1.t0. •LO O OOf•t0 SHOOK, HARDY S BACON TM9"nR" •1.004, ML0C4"T11C 41a"a TOMi(" 110/ 1ML"yT N1Ml.s CR'T, rINOu"1 04100 N1Q 474•000 0 T969t41•4119. T96tCOM-i• M,OJ •t-•%M17 a•aOr'rOTOr. O C OII-Cf CooL e "uat"sOw, P C 11129Or01600. .tfs a tftatt, ft W Or.~r~/.0*Or• 0 f,, 010111111016 46001 M.0967 OOr. O OtOOtt W O KOOIt tfW O•00. 0++•O O..00• t~.•.0.M Mw•*sN Mr•0++a V.r.•~.+y January 9, 1978 LAW OrnC[• Messrs. Thomas F. Ahrensfeld Max H. Crohn, Jr. Joseph Greer Arnold Henson Ernest Pepples Arthur J. Stevens expresses his views. R+004a I •OOJ' V{.•tn O •uM0 NrO-C. r 00•000 O.•-O a re.~t Y-l. • •u.•lJ uwa.. ce.. ..a• a •.•.+[ ••na. C r_.• ar.r • ropa a.•... e•a.. OtOW O . O.t~1d,N r~ . a0•O .-11.- 1 .af.. Vw L r.-l0 Ow0 W . YiOI JO IO/OlOr4 . •O•00`0O M+u. ~ .,1P0 .O O 00• MrJ O O•NIItP +a.t0 . O~.• t4/CO4 . rwp.u0 O• 61v..0. Since my letter of December 19, Bill Shinn and I have studied the Harvard proposal in depth. I have a.l.so d.iscusse~d it with Dr. Huber and esrclvse a December 25 letter in which he While we have some concerr.s, Ail1 and I believe, based cn Dr. Huber's favorable attitude toward the proposal, that it • shculc: be accepted in principle and suggest the following approach by the ir.dustry: 1. Ag:ce to a total payment over five years of $4,C-90,075 which would include the industry's portion of renovation costs "up front." 2. Agree to payment of expenses properly incurred ur.;:er t!:e cur rent ag: ter..ent, not to exceed the buc'.cc::d amount ($633,100 for the calendar year, 19-/ J^ ) • .r 3. Aoree to consider as Project overhead any surplLs c::atc= by :ha repaymnnt of $1"7,500 to the ir.!ustry from Mount Auburn. 4. Co-:^=r.ca neqotiatien of a new contract with the Harv-._ :::edical School for extensicn cf the Project for a period of five years. COIrIULF i ;TIF,I O C.' C.' L: ~ ~ .+ M PLAINTIFF'S ~O~ .ur+.n u.ra wn. o~ l.• 1' R t i N 02 6: EZ 14 6

SHOOK,HARDY a BACON Con.Tittee of Counsel January 9, 1979 Page Two cor„io15sTU,i A general explanation of the proposal is in order. Basically, Dean Meadow has endeavored to propose a program which• could be funded at approximately the present annual funding, or a total over five years of $4,090,075. In addition to 5-year Project costs developed by Dr. Huber of $3,303,575, the Dean proposes renovation at Charlesgate and Mount Auburn Hospital costing a total of $1,140,000. Dean Meadow's letter suggests that the industry pay renovation costs of $1,037,000 which is $1,140,000, less $103,C00 that Mount Auburn would pay directly for general building repair. The hospital would reimburse the industry for portions of the $1,037,000 over a 5-year period, as follows: 1. $184,000 to cover lab and office space set aside for other (non-Huber) hospital research persons, and 2. $127,500 for the cost of space used by Dr. Huber for his non-industry funded research at Hount Auburn. This sum is to be paid from overhead paid to the Hospital by Dr. Huber's "non-industry" grants. Application of the Mount Auburn payments trj total renovation costs is shown as: Total re:i•)vat'on cost ~ : $1,140,000 Mount AuL•uzn pays: General repair (directly) . (103,000) Non-Huber space (over 5 years) - (184,000) Huber non-industry space (cver 5 years) (121,500) Net to industry 572SOO The $725,500 net renovation cost added to direct Project costs of $3,303,575 results in a total 5-year industry expenditure o: $4,029,075. Th:s atr.cur.t ia within the 5-year target figure of $<,090,075. In fact, it prcduces the "small surplus' of $61,000 to which roan M.eadow refers at page three of his proposal. Dean Mca:cw r..enticr.s :.vertead as an ite:n to be negotiated -~ear the end of t`e grant "when the amount of fund3 available for :-ach purooses can := ncre rea3ilf detar:-.incd." I believe (and Dr. 1!uber agrees) that the Dean is referring to this st:all surplus. O . c,.: The proposal indicates that, excspt as stated above, W Harvard and the Hospital will fc:ego cha::ir•; their standard :' r+ r; .. CTR HN C12-654'f°''

SH00/., HARDY S BACON Committee of Counsel January 9, 1979 Page Three ¢oi;rio11.1-;Tir,L overhead rates, if the industry will provide the money for renova- tion as outlined. Based on the standard overhead charged at the various institutions involved (Dean Meadow's figures identify potential overhead of $1,636,636), it seems that this "trade off" is not unfair. The net renovation cost to the industry applied against direct Project costs of $3,303,575 could be considered as "overhead" of about 24%. , I am enclosing two schedules which combine direct Project costs and !~qnovition costs for the S.•year period. Total Project expenditures for five years are the same for each schedule. However, the schedules demonstrate the difference between first year costs if Mount Auburn pays $184,000 directly for non-Fruber space (Schedule A), versus paying that sum over five ye.irs as Dean Meadow proposes (Schedule B). The difference of $147,200 in the first year is significant. Dr. Huber says Mount Auburn car. and will pay directly for this space. We join Dr. Ituber in reco;r.nending this position to the industry. Going forward with the program involves settlement of the current agreement for which funds have been withheld since Jar.uarr 1, 1978. The amount of settlement will be in addition to costs of the new proposal. - So:ne areas of concern are discussed in more detail in the enclosed memorandum; these include: 1. ldeQuac~v of the aniaal facility - Dr. Bernard ^run, recentIy ret~ e enh 30 -Piarvard animal care facilities, participated with Drs. First and Huber 2. bu4ins. A limitation should be set rn the industry's rc.^•ovation cc--.:trr,ent. in the development of the plans for Charlesgate. Dr. Trum will be asked to confirm in writing that the plans -.eet applicable standards for animal care. - O ~-% C.- C.: Construction add-ons and overruns -- This subject " is not montione3-by Dean Meow. Ccnstruction ~ ccsts are increasing at 1% per month in Boston. T!:pra are bound to be changes after construction L 3. ycr.-ir.'ustr.r sunnort -- The pr-os31 assumes Dr. ff-u:r7 nen-indus:ry support (, =:marily NIFt) will rc--in at 35% of total. If this support is lost, it :s conc3i.•able that the research staff would be red::ced to a level which wc-_ld not permit cemp:etion oi indcstry research. .• 1 E.r iR t i1't 02 6: E__ 14 ti.s

14 SHOOK, HAROY S BACON Committee of Counsel January 9, 1979 Page Four COGfINGAP,L 4. Beth Israel Hoseital -- There may be difficulties rn severing tieTs with Beth Israel. You may recall the Hospital breached the lease at Charlesgate and Dr. Huber's Project faces eviction. We have no contractual obligations to Beth Israel, but as a practical matter, some industry-purchased equip-.er.t is still located there. Dean Meadow has told Dr. Huber that the Hospital's problems are its own responsibility and that the equipment belongs to the industry. I believe the Dean will support the industry vis-a-vis Beth Israel, but details of settlement are not now known. I understand that discussion of this matter will be placed on the next Co;r..tittee of Counsel agenda. At that time we can go over the proposal in detail and decide on a course of action. I don't believe it will be necessary for you to view the facilities prior to that meeting. Some of you have visited Charlesgate already. I have been to Mount Auburn and it appears to be a well-adninistered hospital in the more pleasant confines of Ca.-Lbridge. Dr. Huber is very pleased with the Hospital and believes he can work well with its staff. If you have questions, or desire clazit ication, please contact Bill or ma. Sincerely, LS:ccw Enclosures cc: DeBaun Brysnt Janies W. Chapin Alexander Holt_man Lester Pollack N.crace R. Kcrnagay Har.ry C. Rcemer Janet Brown Edwin J. Jocob . r E.r 1 t°C E F~'`l «L. C~ ~`"C ~